Risky business in the eye of the beholder
(Originally published in the The Herald, Monday, June 17, 2013.)
The conventional wisdom is that entrepreneurs are risk takers. Colleen Buck, co-owner of three Elle Marie Hair Studios, seems like a textbook example.
She launched her first Elle Marie Hair Studio with daughter Lorry Green and son Jody Bossert in 2006 in Mill Creek, at a location where another salon was closing. They expanded to two other locations within seven years.
To the untrained eye, this enterprise may have appeared very risky since Buck had no experience in the field and they were starting up where a business had been failing. Add to this the economic challenges and ample competition, and the risk meter would be buzzing off the charts.
But as Buck, Green and Bossert shared their story in April at the Effectual Entrepreneurship workshop at Everett Community College, they demonstrated confidence that their business simply couldn’t and wouldn’t fail.
And that’s where we see how their experience mirrors much of the model developed by Saras Sarasvathy and fellow researchers.
The notion that entrepreneurs are risk-takers is turned on its side. According to Ian Ayers, a co-founder of the Society for Effectual Action, it’s actually a myth.
“Risking their own time, money and reputations, entrepreneurs are more conservative even than bankers,” Ayers said.
In other words, this is a model and application that emphasizes a new way of thinking and a commitment to doing the do-able. Furthermore, the practice of effectuation will take a business-minded person down the path of possibilities rather than returns, while a “risk averse” paradigm would rather shrink returns at the expense of eliminating risk.
When Buck opened the Mill Creek Elle Marie Studio, the thought of failure did not cross her mind. Confident that she had done the research, she partnered with the right stakeholders and collaborated with people who knew the opportunity at hand. Buck ventured out to establish a fun and exciting business that helped employees, clients and the community feel good about what was taking place.
She committed to running a business that generates a five-star experience for clients, employees and the community where they do business.
The business now has three locations, also serving guests in Lake Stevens and adjacent to Alderwood mall in Lynnwood.
Asked if the expansion to Lake Stevens and Alderwood felt very risky, Buck replied: “Are you kidding? We were growing so rapidly that we literally ran out of space. We had to do something and so we expanded to locations in close proximity to Mill Creek in order to still serve clients — even if it is a short drive.”
Buck, a certified life coach, said the success is due to employees at Elle Marie Hair Studios.
“We’ve established a culture of care that permeates the organization and causes employees to support and raise the standard for the entire team. I believe that we’re in the business of growing people — referencing employees — before growing the business or profits,” Buck said.
Building the business from zero to $2.6 million in sales over a seven-year period is quite an accomplishment — especially in light of the economic downturn that had affected businesses during that time. The company employs 55 partners who are passionate about service to clients, as if this is now part of their DNA.
There are many competitors who run excellent salons. Yet sometimes the opportunity to build a new enterprise comes when another business is on its way out. Rather than judge what others do — or have done wrong — Buck determined that the answer lay in a model that emphasizes doing what is right.
Sometimes an owner’s confidence will drive a business to success. Or perhaps sharing that confidence and commitment with your employees is such a powerful multiplier that whatever risk may have been present is simply set aside by those who buck the conventional business wisdom.
Juergen Kneifel is a Senior Associate Faculty in the Everett Community College business program. Please send your comments to firstname.lastname@example.org.